Real Estate Taxes in Costa Rica

If you are accustomed to paying a heavy tax burden and property transfer tax when you sell property, you will be pleasantly surprised at the relatively low taxation in Costa Rica.

Similar to U.S. and Canadian taxation, property taxes are administered by the Municipality with jurisdiction. In the case of the Flamingo-Brasilito-Tamarindo area, it is the Municipality of Santa Cruz that assesses and collects real estate taxes.

The good news is that country-wide, the rate of property taxation is only 0.25% of the recorded value. For example, a property with a recorded value of $150,000 would have an annual real estate tax of only $375.

Secondly, when you sell property in Costa Rica, the transfer is subject to a tax (Impuesto de Traspaso) of 1.5% of the registered value. In addition, various documentary stamps must be attached to the transfer deed (Escritura) which add about 1.1% to the total tax liability.

Note that these transfer taxes can be avoided by the use of Costa Rica corporations in connection with your real estate purchases.

For example, when you purchase a lot or condominium at our Catalina Cove development, it has already been placed in a corporation prior to your purchase. As a result, you actually buy the shares of the corporation which owns the lot or condo. The sale of a corporation is not subject to Costa Rican real estate transfer taxes thus, your closing costs are reduced significantly. Likewise, this savings is available in the future when you sell your corporation/lot or corporation/condo to a new buyer.

These techniques are common practice but should be undertaken only under the expert guidance of a competent Costa Rican attorney and tax advisor.

Contact us today for more information.